What's better? Private or NHS healthcare?
- Which policy is right for me?
- How much does it cost?
- How do I get a quote?
- Should I get insurance for my life insurance?
- The need for life insurance
- Decreasing or level term assurance
- What's in the small print?
- Inheritance tax on policy payout
- Types of cover
- What affects the price?
- What is life insurance?
A simple look at some of the terms that the life insurance world uses to confuse you.
Term Assurance with the built in option to ‘convert’ the policy into something different, such as a Whole of Life policy, in the future.
Another word for policy.
This means that the sum assured you are covered for goes down gradually over the policy term
A stipulation that the policy will not cover for i.e. an activity, event or illness
Family income benefit
Instead of paying a one-off lump sum this type of cover provides a tax-free annual or monthly income until the end of term specified at outset. Following death, this pays out a regular income for the remainder of the term. You can choose a level amount or an income which increases each year.
Where an employer or sports team or union, takes out a policy covering the life of employees or members
Rates will stay the same throughout the term of the policy.
This means that the sum assured you are covered for goes up gradually over the policy term. Often by a set percentage or linked to recognised indices
Policies can be linked to inflation where premiums and benefits increase annually
Joint life first death policies
These are life insurance policies that pay out if either you or your partner dies first. Once the claim has been paid, the policy ceases.
Joint life second death policies
These are life insurance policies that pay out on the death of the second policyholder. Nothing is paid out if the first policyholder dies and there will only be a payout if the second policyholder dies within the term of the policy.
Keyman cover/ keyperson cover
Life cover taken out by a business to protect it against the unexpected death of a key person, owner, director or senior employee.
Life assurance is exactly the same product as life insurance.
This means that the sum assured you are covered for will not change throughout the term of your policy.
Life insurance quote
A life insurance quote will tell you how much cover you may get and how much it may cost. This will depend on a number of factors such as age, smoker status and the term length you require.
Life insurance indication
Similar to a quote but is often a rough price guide .A full quote may need a complete proposal form and other information
Where terms, acceptance and price vary depending on your and your family's medical history. Information obtained by proposal, as well as questions online, in mail and on phone. Information from your GP may be requested
Mortgage protection assurance
Term Life cover where the lump sum reduces in line with the mortgage over time.
A business life cover for partnerships for surviving partners to fund the purchase of a deceased partner’s interest in the business.
The monthly/annual amount you pay for cover
Covers the cost of premiums during periods of ill health and/or unemployment. Usually kicks in after six months. Can be included or an optional extra
Short-term life cover that can be renewed without medical underwriting every 5-10 years. This gives you the option, at the end of the original term, to extend the policy for a further term. The new premiums will be based on your age at the time you take up the option. But it does not reflect any change in health - your state of health is assumed to be the same as it was when you took out the original policy
Reviewable rates can be increased at the insurer’s discretion (usually every five years)
Shareholder Protection life cover is for businesses and enables funds to be available in the event of the death of a shareholder.
The sum assured is the amount of life insurance which would be paid out on your death.
Tax free cash sum
The payout on death may be described as tax-free. This means that benefits will be paid out free of income and capital gains tax. However, your dependents may have to pay inheritance tax unless your policy is written in trust.
A term is the number of years you are covered for under the policy. Life Insurance offers terms in numbers of years.
Terminal illness cover
Many life insurance policies now automatically include terminal illness cover. This means that if you are diagnosed with a terminal illness before the last 12 months of the policy term, you can choose to receive a lump sum payment in advance of your death
Insurance is a contract of 'utmost good faith'. This means that when you apply for cover you must tell the insurer about everything that affects the likelihood of your claiming. If you don't, your claims can be refused.
The policy provider checks each application to decide if the risk of providing cover is in line with the premium the policyholder will pay.
Waiver of premium
Covers the cost of premiums during periods of ill health and/or unemployment. Usually kicks in after six months. Can be included or an optional extra.